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2019/09/10 / Erste Group Research

Private consumption shields the growth

The burst of optimism that the Polish economy is resilient to unfavorable external developments and able to sustain the growth dynamics from the first quarter has faded. GDP growth has slowed to 4.5% y/y in 2Q19 and we expect this trend to continue in the second half of the year. The turbulent global environment is likely to weigh on the growth dynamics. We thus revise our GDP forecast to 4.4% this year and 3.8% in 2020.

The inflation rate has been on the rise, going from 0.7% in January to 2.8% in August. It should remain above the central bank target of 2.5% until the end of the year and peak around 3.5% in 1Q20. Food price dynamics show no signs of deceleration and an increase in energy prices next year is more than likely. We thus see average inflation going up from 2.3% this year to 2.9% in 2020, with risks to the upside. Despite increasing inflationary pressure, we expect stability of rates until 2020 and beyond.

The Law and Justice party is leading in the polls with support of around 40% and is very likely to win the October parliamentary election. Currently, the question is whether the government will sustain a simple majority. That highly depends on the result of the opposition parties, such as the Polish People's Party (PSL), support for which is holding close to the threshold of 5%.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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